§ 260. 363. Corporation, Officers, and Assignee. An action by stockholders of a bank against the president and other officers, the corporation itself, and an assignee, alleging fraud and violation of duty by the officers, misapplication of funds terminating in a fraudulent assignment, and praying that the assignment might be set aside, the officers removed, a receiver appointed, and the bank wound up, was sustained in Minnesota as being within the jurisdiction of an equity court, and was declared to be brought against the proper parties. In a similar action, based upon the same facts, and asking for a removal of the officers, the appointment of a receiver to take charge of the assets, and for an election under the direction of the court, the corporation was held to be a necessary party defendant as well as the officers implicated.2

§ 261. * 364. Assignor of Stock. Rule in Indiana. In New York. The holder of stock in a corporation assigned it to a creditor as collateral security for the debt, and this creditor in turn assigned or pledged the security to a third person. The latter having commenced an action to enforce his right of property against the

Rep. 547; Sleeper v. Goodwin, 67 Wis. 577, 586; Nolan v. Hazen, 44 Min. 478. In a bill by creditors of a corporation to enforce the liability of a stockholder for his unpaid subscription, the corporation, if it still exists, is a necessary party: Patterson v. Lynde, 112 Ill. 196. [All the stockholders and all the creditors must be made parties: Van Pelt v. Gardner (1898), 54 Neb. 701, 75 N. W. 874; Gianella v. Bigelow (1897), 96 Wis. 185, 71 N. W. 111; Gainey v. Gilson (1897), 149 Ind. 58, 48 N. E. 633 (even where they reside in different counties), but see contrary rule in Kell v. Lund (1896), 99 Ia. 153, 68 N. W. 593, where it is held that each stockholder is entitled to a separate action in the county of his residence.]

1 Mitchell v. Bank of St. Paul, 7 Min. 252. [The corporation is not a necessary party in a suit by the receiver of a corporation against the stockholders to recover the amount of their liability for the debts of the corporation: Moore v. Ripley (1898), 106 Ga. 556, 32 S. E. 647. Corporation not a necessary party in a suit by corporation creditors to enforce unpaid stock subscriptions: Van Pelt v. Gardner (1898), 54 Neb. 701, 75 N. W. 874. Nor is it a

necessary party, when insolvent, in an action by a receiver to recover money belonging to the corporation from a third party: Nealis v. Am. Tube & Iron Co. (1896), 150 N. Y. 42, 44 N. E. 944. The corporation is an indispensable party defendant in a suit to marshal its assets: Steele Lumber Co. v. Laurens Lumber Co. (1896), 98 Ga. 329, 24 S. E. 755.

In an action by stockholders against the directors of a corporation for an accounting for moneys received from an improper sale of stock, where one of the defendants dies pending the suit, his administrator may be substituted without giving rise to a misjoinder: Morgan v. King (1900), 27 Colo. 539, 63 Pac. 416.]

2 French v. Gifford, 30 Iowa, 148, 159. See also Wickersham v. Crittenden, 93 Cal. 17, 33; Swan Land & Cattle Co. v. Frank, 39 Fed. Rep. 456. [In J. K. Orr Co. v. Kimbrough (1896), 99 Ga. 143, 25 S. E. 204, the court said: "Although an equitable petition may mention the name of a corporation and contain a prayer for certain relief against it, such corporation is not a party to the petition where there is no prayer for process as to it."]

corporation alone, it was decided, in Indiana, that both of the assignors were necessary defendants under the special provisions of the code of that State, which require the assignors of things in action not negotiable to be made parties in a suit by the assignee.1 But in New York, where the debtor, defendant in an action by an assignee of the demand, was entitled to an accounting with the assignor in respect of the claim sued upon, in order to ascertain in fact whether any such claim existed, and applied for an order bringing him in as a defendant for that purpose, it was held that such assignor was neither a necessary nor a proper party, and could not be brought in.2 The courts of New York seem to have established the rule under the code for that State, that an assignor of a thing in action is never a proper, much less a necessary, defendant in an action by the assignee, even when the plaintiff's contention depends upon the legal relations and liabilities existing between the defendant — the debtor — and the assignor. This doctrine is entirely contrary to that which prevails in many of the States, and which is sanctioned by their codes and approved by their courts; and it seems to be equally opposed to the former doctrine of equity, which permitted, if it did not require, the presence of the assignor in all cases where the assignment did not convey a legal title, and especially where an accounting or other settlement of matters in dispute between the assignor and the defendant was necessary in order to ascertain the amount of the plaintiff's demand.3

4

§ 262. *365. Accounting by one Partner against another and by Surviving Partner. In an action virtually of accounting by one partner against another to recover the plaintiff's share of the assets or profits, and, a fortiori, when the action is confessedly one for accounting, all the partners must be defendants. This special rule assumes that there has been no settlement, no balance ascertained and agreed upon, so that a simple action at law

1 Ind. & Ill. Cent. R. Co. v. McKernan, 24 Ind. 62.

2 Allen v. Smith, 16 N. Y. 415. See also Andrews v. Gillespie, 47 N. Y. 487, which holds that the mortgagee who assigned the mortgage is not a proper defendant in an action to foreclose, even though the defence pleaded by the mortgagor is that of mistake in drawing the mortgage, and prays the relief of reformation.

Story's Eq. Pl. § 153, and notes;

1 Dan. Ch. Pl. (4th Am. ed.), pp. 197199, and notes; Miller v. Bear, 3 Paige, 467, 468; Whitney v. McKinney, 7 Johns. Ch. 144; Trecothick v. Austin, 4 Mason, 41-44.

*

4 [See § 104, and cases cited in the notes to that section.]

5 Duck v. Abbott, 24 Ind. 349; Settembre v. Putnam, 30 Cal. 490.

could be maintained therefor by one partner against another, but the situation is such that an action for an accounting is the only relief given by the law. In such equitable action all the partners are necessary parties. A partnership, being engaged in the business of buying and selling lands, for purposes of convenience had all the titles taken in the name of one member of the firm. He died, being at the time thus the apparent owner of lands which were actually firm property. An action by the survivor for an account and settlement was properly brought against the heirs, widow, and administrator of the deceased; these persons were all held to be necessary parties.1

§ 263. * 366. VII. Actions for Specific Performance. Conflict of Opinion herein. It is the established rule of equity procedure that, in the ordinary and direct action to compel the specific performance of a contract for the sale of lands, the parties to the contract themselves, or the persons who have become substituted in their place, as the heirs,2 and under certain circumstances the executors or administrators, are the only proper parties plaintiff or defendant. A suit for the purpose of obtaining this special relief cannot be combined with a cause of action for relief against other persons claiming an interest in the same land; in other words, this action cannot be made to determine the titles of other claimants, nor to foreclose the liens of subsequent incumbrancers. This well-settled rule has, however, been departed

1 Gray v. Palmer, 9 Cal. 616. But the heirs of a devisee of the deceased, it has been held, are not necessary parties: Van Aken v. Clarke, 82 Iowa, 256. [In an action against a receiver of a partnership on a contract made by him as receiver, the surviving partner is not a necessary party: Painter v. Painter (1902), 138 Cal. 231, 71 Pac. 90. And where one partner institutes proceedings for a receiver of partnership assets to prevent another partner from wasting them, firm creditors are not necessary parties: Allen v. Cooley (1898), 53 S. C. 414, 31 S. E. 634.]

2 [It was held in Salinger v. Gunn (1895), 61 Ark. 414, 33 S. W. 959, that in a suit by the vendee of land for specific performance of the contract of sale, the heirs of the deceased vendor are necessary parties.]

3 Taskel v. Small, 3 My. & Cr. 63, 68, per Lord Cottenham, Chan.; Mole v. Smith, Jacob, 490, 494, per Lord Eldon, Chan.; Wood v. White, 4 My. & Cr. 470; Robertson v. Gr. Western Ry. Co., 10 Sim. 314; Fagan v. Barnes, 14 Fla. 53, 57; Knott v. Stephens, 3 Oreg. 269; Moulton v. Chafee, 22 Fed. Rep. 26; Ashley v. Little Rock (Ark. 1892), 19 S. W. 1058; Washburn & M. Man. Co. v. Chicago G. W. F. Co., 109 Ill. 71. In Tasker v. Small, mortgagees of the land were held to be improper defendants. In another case, a tenant of the vendor in possession was declared an improper party. All persons interested in the subjectmatter of the action as holders of the legal or equitable titles to the premises in question were declared to be necessary parties, plaintiff or defendant, in McCotter v. Lawrence, 6 N. Y. Sup. Ct. 392, 395.

from by some State courts. Thus, in a case decided by the Supreme Court of Minnesota, a contract to convey land had been given, and the vendee had gone into possession. Subsequently to the execution of the agreement and the change of possession, certain persons had recovered judgments against the vendor, which they claimed to be liens upon the land. These judgment creditors were held to be proper defendants in the suit for a specific performance brought by the vendee for the purpose of cutting off their rights of redemption, it being assumed that their liens were subordinate to the vendee's rights. And it was held in a recent case in California that, in an action to compel the specific performance of such a contract, the land being an undivided share of a specific tract, all persons subject to the vendee's equities, and holding adversely to him, must be made defendants.2

§ 264.

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In a

*367. Holder of Adverse Claim. Personal Representative of Deceased Vendor. Heirs. New York and Iowa Cases. somewhat peculiar case recently decided by the Supreme Court of New York, a person holding a subsequent and adverse claim to the plaintiff was declared to be a necessary defendant to a complete determination of the issues. The action being brought to procure the specific performance of a land contract made between the plaintiff and the defendant, the complaint alleged that the defendant had made a subsequent contract to convey the same land to F., and prayed an injunction restraining defendant from making a conveyance to F. Upon this allegation and prayer for relief, it was held that such subsequent vendee was a necessary party.3

1 Seager v. Burns, 4 Minn. 141, 145, per Emmet J. The judge made no suggestion of a doubt whether these creditors were proper parties. The whole discussion turned upon the question whether the general allegation of the plaintiff, that they "claimed an interest," etc., was enough. They were likened by the court to junior incumbrancers in a mortgage foreclosure. None of the authorities last cited were mentioned.

2 Agard v. Valencia, 39 Cal. 292. This case is somewhat peculiar, and the facts are exceedingly complicated. The decision certainly seems to conflict with the general rule as established by equity courts, and as stated in the text.

8 Fullerton v. McCurdy, 4 Lans. 132. When A. agrees to convey to B., and afterwards conveys to C., who has notice of the prior contract, C. is a necessary defendant in an action by the original vendee to compel a specific performance. Stone v. Buckner, 12 Sm. & M. 73; Daily v. Litchfield, 10 Mich. 29; Spence v. Hogg, 1 Coll. 225; Atchison, T. & S. F. Ry. Co. v. Benton, 42 Kan. 698. One to whom the vendor had assigned the contract as collateral security was held to be a proper defendant in Butler v. Gage (Colo. Sup. 1889), 23 Pac. R. 462. [See also Water Supply Co. v. Root (1895), 56 Kan. 187, 42 Pac. 715, where the court in the sylla bus said: "Where A. makes a written

Where the vendor has died, and the vendee brought his action against the sole heir at law of the deceased, but conceded in his complaint that the entire purchase-money had not been · paid, and averred a tender and a readiness to pay, the administrators of the vendor were held to be necessary defendants in New York. It would appear from the reasoning of this case that its decision is confined to the single case in which the vendor has died before the purchase-money has been entirely paid, and in which the same remains unpaid up to the time of commencing the action. If the purchase price has been paid in full, either to the vendor during his lifetime, or to his administrators after his death, then his heirs would seem to be, in general, the only necessary parties defendant, his personal representatives not then having any interest in the controversy.2 In the face of a statute providing that an action for a specific performance of a land contract may be brought against the executor or administrator of a deceased vendor, and that other parties are not necessary, but may at the discretion of the court be brought in, the Supreme Court of Iowa has held that such personal representatives are not necessary, but only proper parties; that in the absence of the statute the heirs of the vendor are the only proper or possible parties; and that, the language of the statute being permissive, it will not be construed to make the administrators or executors necessary defendants.3

contract for a sale of real property to B., which is forthwith placed on record, and afterwards conveys the property to C., who buys with constructive notice of the rights of B., under his contract, held, that an action to compel a conveyance of the legal title, after full performance of his part of the contract by B., may be maintained against C., and that A. is not an indispensable party to the action."]

1 Potter v. Ellice, 48 N. Y. 321, 323. See also Thompson v. Smith, 63 N. Y. 301; Rain v. Roper, 15 Fla. 121; Butler v. Gage (Colo. Sup. 1889), 23 Pac. R. 462. 2 All the heirs of a deceased vendor are necessary defendants in the action. House v. Dexter, 9 Mich. 246; Duncan v. Wickliffe, 4 Scam. 452. See also Rogers v. Wolfe, 104 Mo. 1.

8 Judd v. Moseley, 30 Iowa, 423, 427; Story's Eq. Pl. §§ 160, 177; Champion v. Brown, 6 Johns. Ch. 402; Townsend v.

Champernowne, 9 Price, 130. See also Lowry v. Jackson, 27 S. C. 318; Sawyer v. Baker, 66 Ala. 292; Houston v. Blackman, 66 Ala. 559; Coffey v. Norwood, 81 Ala. 512; Walters v. Walters, 132 Ill. 467. If the vendor sues the heirs alone of the deceased vendee, the latter can insist upon the administrators being brought in. Story's Eq, Pl. § 177; Cock v. Evans, 9 Yerg. 287. The vendor and the vendee having both died, the heirs and widow of the latter brought a suit against the devisees of the vendor to whom the land had been devised, and the parties were all held to be proper, in Peters v. Jones, 35 Iowa, 512, 518; see cases cited by Miller J. at page 518. When the obligor in a title bond has died, his heirs at law are necessary parties to a suit by his personal representatives to subject the land to the payment of the purchase-money: Grubb v. Lookabill, 100 N. C. 267.